The Court finds that the ACA requires annual payments to insurers, and that Congress did not design the risk corridors program to be budget-neutral. The Government is therefore liable for Moda’s full risk corridors payments under the ACA. In the alternative, the Court finds that the ACA constituted an offer for a unilateral contract, and Moda accepted this offer by offering qualified health plans on the [exchanges]. …

Today, the Court directs the Government to fulfill [its] promise. After all, “to say to [Moda], ‘The joke is on you. You shouldn’t have trusted us,’ is hardly worthy of our great government.” Brandt v. Hickel, 427 F.2d 53, 57 (9th Cir. 1970).

We haven’t really gotten much, but I did clear about 8" or so off the deck in order to stock up on firewood yesterday, so that is all new. I suppose everyone in the NE is getting the same so may be no big deal.

While the greater part of me doesn’t see how an organization can make such a horrendous mistake, a lesser part of me is also appalled that headline writers don’t know the difference between to play and to sing. As in the vocalist did not play the wrong anthem, he sang the wrong verse. Personally I prefer the second verse that extols the virtues of German women, wine and song.

Abstract:
The reallocation of mortgage debt to low-income or marginally qualified borrowers plays a central role in many explanations of the early 2000s housing boom. We show that such a reallocation never occurred, as the distribution of mortgage debt with respect to income changed little even as the aggregate stock of debt grew rapidly. Moreover, because mortgage debt varies positively with income in the cross section, equal percentage increases in debt among high- and low-income borrowers meant that wealthy borrowers accounted for most new debt in dollar terms. Previous research stressing the importance of low-income borrowing was based on the inflow of new mortgage originations alone, so it could not detect offsetting outflows in mortgage terminations that left the allocation of debt stable over time. And while defaults on subprime mortgages played an important part in the financial crisis, the data show that subprime lending did not cause a reallocation of debt toward the poor. Rather, subprime lending prevented a reallocation of debt toward the wealthy.

Abstract:
This paper investigates in-group bias in financial markets. Specifically, we argue that equity analysts may have less favorable opinions about firms that are not headed by CEOs of their own “group”. We define groups based on gender, ethnicity and political attitudes. Examining analysts’ earnings forecasts, we find that male analysts have lower assessments of firms headed by female CEOs than of firms headed by male CEOs. Results are very similar if in-groups are defined based on ethnicity or political attitudes: Earnings forecasts of domestic analysts are lower for firms headed by foreign CEOs and earnings forecasts of Republican analysts are lower for firms headed by Democrat CEOs. As a result, earnings surprises of firms headed by female, foreign, or Democrat CEOs are systematically upward biased. Overall, our results provide robust evidence for in-group bias in financial markets.

I’m fascinated by the geographical political sorting that I have observed my entire life: Why are rural/suburban/urban areas to varying degrees politically heterogeneous (true suburbs) or relatively homogeneous (rural/urban)?

What is the cause-effect relationship? Do people move to these places and their political beliefs are influenced by them? Do people move to where their political views are in the majority? Does where we grew up influence the most (either way)?

I live in a rural area now, racially as homogenous as you can get in the US (The racial makeup of my town in 2010 census was 98.4% White, 0.1% African American, 0.2% Native American, 0.4% Asian, and 0.9% from two or more races). And I love it, because I can live cheaply and I enjoy/prefer solitude. But my other preference (and where I lived before I was married) was right downtown in the middle of it all. I grew up in a rural area (surrounded by massive farm and grazing properties) just outside a very urbanized area, and my school district was racially and ethnically diverse - Coatesville was a steel town that still identified neighborhoods by ethnicity/national origin such as Italian, Polish, etc.

In Manhattan last weekend, I was energized by the diversity that was everywhere - color, age, languages being spoken - it was, for me (and in almost as misguided a fashion as the rural/Tea Party claim for towns like mine), the “Real America”. (Tyler Cowen votes Brooklyn as most multicultural, and his description matches my experience there during a weekend stay two years ago - very soft boundaries between ethnic enclaves).

Here’s a couple of interesting pieces from a Hoover Institution political scientist about voting patterns by geography. What I love about them more than the substance is that I don’t believe you would be able to discern the politics of the writer without that accompanying affiliation. (Though the Hoover Institution resists being labeled as “conservative”, the claim is laughable when looking at a list of its members.)

For as long as I can remember, I’ve struggled to make sense of the terrifying gulf that separates the inside and outside views of beliefs.

From the inside, via introspection, each of us feels that our beliefs are pretty damn sensible. Sure we might harbor a bit of doubt here and there. But for the most part, we imagine we have a firm grip on reality; we don’t lie awake at night fearing that we’re massively deluded.

But when we consider the beliefs of other people? It’s an epistemic ■■■■ show out there. Astrology, conspiracies, the healing power of crystals. Aliens who abduct Earthlings and build pyramids. That vaccines cause autism or that Obama is a crypto-Muslim — or that the world was formed some 6,000 years ago, replete with fossils made to look millions of years old. How could anyone believe this stuff?!

No, seriously: how?

Let’s resist the temptation to dismiss such believers as “crazy” — along with “stupid,” “gullible,” “brainwashed,” and “needing the comfort of simple answers.” Surely these labels are appropriate some of the time, but once we apply them, we stop thinking. This isn’t just lazy; it’s foolish. These are fellow human beings we’re talking about, creatures of our same species whose brains have been built (grown?) according to the same basic pattern. So whatever processes beget their delusions are at work in our minds as well. We therefore owe it to ourselves to try to reconcile the inside and outside views. Because let’s not flatter ourselves: we believe crazy things too. We just have a hard time seeing them as crazy.

So, once again: how could anyone believe this stuff? More to the point: how could we end up believing it?

After struggling with this question for years and years, I finally have an answer I’m satisfied with.

BELIEFS AS EMPLOYEES

By way of analogy, let’s consider how beliefs in the brain are like employees at a company. This isn’t a perfect analogy, but it’ll get us 70% of the way there.[1]

Employees are hired because they have a job to do, i.e., to help the company accomplish its goals. But employees don’t come for free: they have to earn their keep by being useful. So if an employee does his job well, he’ll be kept around, whereas if he does it poorly — or makes other kinds of trouble, like friction with his coworkers — he’ll have to be let go.

In the long history of misinformation, the current outbreak of fake news has already secured a special place, with the president’s personal adviser, Kellyanne Conway, going so far as to invent a Kentucky massacre in order to defend a ban on travelers from seven Muslim countries. But the concoction of alternative facts is hardly rare, and the equivalent of today’s poisonous, bite-size texts and tweets can be found in most periods of history, going back to the ancients.

Procopius, the Byzantine historian of the sixth century AD churned out dubious information, known as Anecdota, which he kept secret until his death, in order to smear the reputation of the Emperor Justinian after lionizing the emperor in his official histories. Pietro Aretino tried to manipulate the pontifical election of 1522 by writing wicked sonnets about all the candidates (except the favorite of his Medici patrons) and pasting them for the public to admire on the bust of a figure known as Pasquino near the Piazza Navona in Rome. The “pasquinade” then developed into a common genre of diffusing nasty news, most of it fake, about public figures.

Although pasquinades never disappeared, they were succeeded in the seventeenth century by a more popular genre, the “canard,” a version of fake news that was hawked in the streets of Paris for the next two hundred years. Canards were printed broadsides, sometimes set off with an engraving designed to appeal to the credulous.

Abstract:
To benefit from information provided by others, people must be somewhat credulous. However, credulity entails risks. The optimal level of credulity depends on the relative costs of believing misinformation versus failing to attend to accurate information. When information concerns hazards, erroneous incredulity is often more costly than erroneous credulity, as disregarding accurate warnings is more harmful than adopting unnecessary precautions.* Because no equivalent asymmetry characterizes information concerning benefits, people should generally be more credulous of hazard information than of benefit information. This adaptive negatively-biased credulity is linked to negativity bias in general, and is more prominent among those who believe the world to be dangerous. Because both threat sensitivity and dangerous-world beliefs differ between conservatives and liberals, we predicted that conservatism would positively correlate with negatively-biased credulity. Two online studies of Americans support this prediction, potentially illuminating the impact of politicians’ alarmist claims on different portions of the electorate.